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From handshake to handover: The dynamics of selling family businesses and legacy preservation

5 min read

By Zita Nikoletta Verbényi

Business families and individuals selling shares or stakes offer valuable insights into liquidity events, but even with careful planning, such transactions can often yield less desirable outcomes

    • Selling family business for strategic alliances 
    • Emotional triggers and reckoning 
    • Legacy considerations 

    For centuries, business families have actively sought collaboration and partnership with their counterparts, not just as shareholders but as strategic allies. The inclination towards being acquired by fellow business families is grounded in many factors, including shared values, a commitment to long-term goals, coupled with patient capital, and the resonance of relatable legacy narratives.  

    The unique position of family enterprises allows them to adeptly recognise, comprehend and navigate challenges arising from the intricate dynamics within both the acquiring and selling families. In contrast to corporate entities and private equity firms driven primarily by profit motives, families stand out for their ability to uphold family values. 

    Whenever family members decide to sell their shares, it may not only dilute the value of the firms, but also lead to regret and disappointment later. It also might bring in partners who might not be appreciated by the family, other shareholders and stakeholders. Family business ownership has historically offered a unique and privileged opportunity, a position to influence, charter new territories in a more agile and intentional way, and also weave various complex legacy tapestries together over generations.  

    In recent high-profile deals, Subway’s sale to private equity firm, Roark Capital, and Bucherer’s purchase by Rolex highlight the complexity of family business share sales and their historically-rooted influences. 

    Subway, a sandwich chain founded in 1965 as Pete’s Super Submarines in Connecticut by Fred DeLuca and family friend Peter Buck, is a franchise model with more than 100 locations worldwide. The family firm chose Roark’s expertise in restaurant and franchise business models as the ideal buyer to help with rising costs of energy and food ingredients. 

    Bucherer, the Swiss watchmaker, was founded in 1888. Ernst Bucherer and Hans Wilsdorf, the founder of Rolex, formed a successful partnership at the turn of the 20th century. In 1924, Bucherer secured an agreement with Wilsdorf to make the family-held Bucherer Group a major retail partner of Rolex. Their shared entrepreneurial spirit and wide-ranging international experiences transformed into a prosperous relationship. The partnership has been a fine balancing act for them to decide who dominates and controls the businesses for many decades. 

    Reasons for selling business 

    Family business owners may sell their businesses, depending on family or business circumstances to achieve numerous goals, including long-term strategic goals. In multigenerational business families, family dynamics or succession planning may lead to selling due to the absence of viable successors. In some countries like Eastern Europe, this is not unusual for first-generation business owners. 

    The resulting new liquidity after a sale comes with its own hurdles. Setting up trusts, a family office, or joining a multifamily office can help manage assets in the long run.  

    Another reason for a liquidity event arises when the founder seeks to transition from their current business involvement, often by cashing out to explore new ventures that may facilitate the path for the next generation, setting up a family office, or to bow out completely by retiring. 

    Liquidity events may also be consequences of capital concerns, including crisis, lack of strong market presence, or an offer that the family cannot refuse. Hostile takeovers are a rare occurrence in such scenarios, as most companies are made available for sale through specific deals with a select group of potential investors.  

    Additionally, business life cycle-related factors may also prompt a decision to sell the business. These factors can encompass issues such as the failure to diversify, challenges in talent replenishment, long-term estate planning considerations, a gradual relaxation of family control, trust-related issues, conflicts of interest, or overall viability concerns.  

    In instances where less-involved family members, primarily beneficiaries of the business, opt to exchange their shares for cash, this can disrupt the cohesive nature and reputation of the family’s ownership, potentially leading to adverse effects on family members and setting a precedent for further dilution of the business’s overall value. 

    Families may also opt for alternative strategies such as implementing a family or employee stock ownership plan, devising special dividend plans, exploring a redemption plan, or preparing their business for an initial public offering (IPO). 

    Emotional triggers and reckoning 

    Selling a business to another family or private equity firm can potentially reduce the foundational family essence and ethos over time and even disappear due to the altered focus. Business families frequently emphasise the symbiotic relationship between a thriving business and a harmonious family life, recognising that the health of one can significantly impact the other.  

    However, when the ownership of the family business comes under internal scrutiny, it often triggers a multifaceted evaluation. This assessment covers financial and legal planning, market positioning, long-term financial sustainability, and leadership considerations, all of which inherently intersect with family dynamics. It is essential to acknowledge that everyone has their own perspective on selling the family business. These are inherently shaped by a myriad of factors, including the country of origin, industries, and family culture. 

    The sale of family shares may present a daunting experience filled with regret, guilt, a sense of diminished ownership, and the potential loss of community recognition. In response to such transitions, it’s not uncommon for certain family branches to distance themselves from the main branch, avoiding involvement in the transactional intricacies.  

    Individuals within the family typically navigate distinct phases of adjustment, often involving a profound sense of loss, a shift in purpose, and an overwhelming sense of responsibility associated with newfound wealth. Others may view these opportunities positively, leveraging them to fulfil their dreams. However, timelines and cold efficiency over planning can be challenging as the transition spans both the realms of business and family dynamics. 

    Missing the activity of taking part in regular family meetings can present a stark contrast from past practices and endanger overall family unity. Consequently, encouraging discussions that encompass both emerging and planned themes, diverse viewpoints, ownership and wealth usage, and classifying roles and responsibilities is vital for re-establishing trust within the family. This collaborative approach to planning, both for long-term and future endeavours, plays a pivotal role in fortifying the bonds of trust among family members.  

    Liquidity events may also mean family principals are losing their traditional roles and responsibilities, and while these events bring cash infusions, adjusting to these new scenarios may pose challenges. Hence, planning for all aspects of everyone’s journey and the subsequent steps become vital to maintaining family engagement and alignment. 

    Legacy considerations 

    When family essence, overall family legacy, and individual legacy are not considered, the accumulated legacy may become tarnished and difficult to navigate, especially within the family context. Following a liquidity event, family members may experience a sense of void and emptiness as their business and the associated family history disappear. This can lead to a significant shift in how the family and its brands are perceived. 

    Properly evaluating all aspects involved in a liquidity event, which entails capturing complexities, risks, and opportunities that affect everyone, including next-generation ventures is paramount. Communicating these considerations with all stakeholders is crucial for ensuring a smooth transition, and effectively future-proofing family and legacy matters for generations to come. 


    Zita Nikoletta Verbényi is the founder and legacy aesthete at The Legacy Atelier™, and she also sits on Wealth & Society’s Global Advisory Board. 

Keywords: High-net-worth, Wealth, Centi-millionaires, Categorisation, Very-high-net-worth, Legacy Planning, Investment, Estate Planning, Taxation
Institution: Capgemini, WealthX, Credit Suisse, UBS, Henley & Partner’s, Goldman Sachs, Investopedia
Country: US, UK, India, China, Switzerland, Vietnam.
People: Zita Nikoletta Verbényi
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